Conflict of Laws
| Date | 01 December 2015 |
| Published date | 01 December 2015 |
| Author | Joel LEE Tye Beng LLB (Hons) (Wellington), LLM (Harvard), DCH (AIH); Barrister and Solicitor (New Zealand), Advocate and Solicitor (Singapore); Associate Professor, Faculty of Law, National University of Singapore. |
11.1 For 2015, there are 12 cases that will be examined in this review. As in previous years, it is useful to note that conflict of laws cases sometimes relate to other areas of law. In these situations, this review will only examine those parts of the case that are relevant to the field of conflict of laws.
11.2 A mainstay in international commercial litigation is an application for a stay of proceedings based on the doctrine of forum non conveniens. It is well-accepted that the doctrine of forum non conveniens consists of two stages as established in Spiliada Maritime Corp v Cansulex Ltd[1987] AC 460 (‘Spiliada’). The first stage (‘Stage 1’) seeks to see if there exists a more appropriate forum than Singapore and this burden falls on the defendant who is applying for the stay. If it is shown that there is a more appropriate forum, then the burden shifts to the plaintiff in the second stage (‘Stage 2’) to show that the action should nonetheless not be stayed because it would deprive the plaintiff of a legitimate juridical or personal advantage. At the end of the day, the doctrine of forum non conveniens seeks to identify the best location to hear the matter in the interests of justice. Three cases deal with the application of this in a commercial context.
11.3 Bunge SA v Indian Bank[2015] SGHC 330 (‘Bunge’) involved an action by the Swiss plaintiff for moneys had and received and for breaching an undertaking to issue a letter of credit. The Indian defendant applied for a stay of proceedings based on forum non conveniens. For the purposes of this review, the facts can be stated simply.
11.4 The first plaintiff financed an Indian company, Varun Industries Limited (‘Varun’) with working capital through a series of back-to-back contracts where the first plaintiff sold a cargo of soybean meal to Varun who would then sell it on to a third party who in turn sell it to the second plaintiff. As part of these transactions, letters of credit were required and the defendant bank was appointed by Varun as the issuing bank. To secure the value of the letter of credit to be issued, the defendant required a cash deposit for the approximate value of the letter of credit. This cash deposit would be provided by the first and second plaintiffs (‘Plaintiffs’) and an undertaking was required of the defendant that it would issue the letter of credit within the stipulated time, failing which the said deposit would be refunded to the Plaintiffs. Unfortunately, the path did not run smooth and for the transaction between Varun and the third party, a letter of credit was not issued and a refund of the second plaintiff's remittance was not made.
11.5 In relation to the stay of proceedings, this case was a fairly straightforward application of the doctrine of forum non conveniens. The general connecting factors, witnesses and evidence pointed clearly to India as the more appropriate forum. In particular, the court considered the importance of Varun as a possible party to this action due to its close involvement in the transactions. Taking into account that Varun's officers were more likely to testify if the trial was in India strongly pointed to India as the more appropriate forum. This indication was also supported by the court's view that the contracts were governed by Indian law and that the governing law for the restitutionary claim would therefore also be Indian law. Therefore, the conclusion at Stage 1 was that the matter would be stayed.
11.6 At Stage 2, the Plaintiffs sought to argue that they would suffer injustice as there would be lengthy delays to trial in India. On this point, the court opined that assertions and anecdotal evidence would not be sufficient and that such a claim needed to be supported by cogent evidence. This is of course sensible as the Singapore courts have to be careful to not cast aspersions on the court systems of foreign friendly nations. Taking into account the availability of a summary judgment procedure and an undertaking from the defendant to cooperate in the expediting of litigation, the court concluded that it would be incorrect to say that the Plaintiffs would not obtain justice in the Indian courts.
11.7 As mentioned earlier, this case is a straightforward application of the doctrine of forum non conveniens. However, there is an observation that is worthy of note. At Stage 2, the court in this case seemed to have used a different formulation of the test. Ordinarily, Stage 2 requires an examination of whether a stay would deprive the plaintiff of a legitimate advantage. The formulation used in this case is that ‘it will ordinarily grant a stay unless the plaintiff can prove that there are special circumstances by reason of justice which require that a stay should nonetheless not be granted’ (Bunge at [35]). Thus far, it appears to be so far so good. However, the court goes on to say that ‘in exercising its discretion, the court will also have regard to whether the defendant, in applying for a stay, genuinely desires a trial in the foreign country, or is only seeking procedural advantages, and whether the plaintiff would be prejudiced by having to sue in a foreign court (see The Eleftheria[1969] 1 Lloyd's Rep 237 [‘Eleftheria’] at 242)’ (Bunge at [35]). This formulation and the reference to Eleftheria have to do with the line of cases relating to applications for stays of proceedings based upon an exclusive foreign jurisdiction clause. There is also reference to The ‘Vishva Apurva’[1992] 1 SLR(R) 912, another case relating to stays based on exclusive foreign jurisdiction clauses when the court discusses the possible delay to a trial in India (Bunge at [63]).
11.8 While it would be fair to say that there would be some overlap between the factors taken into account in a forum non conveniens application and one based on an exclusive foreign jurisdiction clause, the tests and the standards are different. In the latter case, the party resisting the stay must show strong cause, which is a higher standard than that required in a forum non conveniens application. To be fair, the court's decision is correct even if it had applied the standard formulation.
11.9 It is not clear if the court was proposing an alternative formulation to Stage 2 of the test from Spiliada or if there is an intention to amalgamate the approach from Spiliada and that of exclusive foreign jurisdiction clauses or if the exclusive jurisdiction clause line of cases was merely illustrative when discussing the point relating to delay of trial. Considering the lack of discussion on this part, it is more likely to be the latter. In this author's opinion, this must be correct as the bases for the two applications are different and it would be unwise to mix the two.
11.10 Abdul Rashid bin Abdul Manaf v Hii Yii Ann[2016] SGHCR 1 is also related to a forum non conveniens application. The plaintiff invested in two of the defendant's timber concessions in Papua New Guinea. Both parties are Malaysian citizens. Agreements for the concessions were drafted and signed in Malaysia. Subsequently, a settlement was entered into which was governed by English law and where parties submitted to the non-exclusive jurisdiction of the Queensland courts. Payment under the settlement agreement was not made and the plaintiff commenced proceedings. The defendant applied for a stay arguing that Malaysia was the more appropriate forum. For the sake of completeness, it is useful to mention that there was a previous suit between the same parties where the defendant failed in his application to stay proceedings based on the non-exclusive jurisdiction clause pointing to Queensland. This case was reviewed in last year's instalment of this chapter ((2014) 15 SAL Ann Rev 202 at 207–209, paras 11.28–11.37) and it is not clear why a substantially similar application has been filed again.
11.11 Be that as it may, as the learned assistant registrar notes (at [1]), ‘[t]here remain few unresolved issues in the law of forum non conveniens’. In this case, again, a straightforward application of the test from Spiliada saw the defendant not having satisfied the court at Stage 1 in showing that there was a more appropriate forum elsewhere, in this case, Malaysia.
11.12 However, the court did spend some effort and time looking at two aspects of the forum non conveniens analysis and it is to these that we will now turn. The first aspect deals with whether the merits of the case are relevant to a forum non conveniens application. While there was binding precedent in the form of The ‘Rainbow Joy’[2005] 3 SLR(R) 719 (‘Rainbow Joy’) which held that a court should not be required to go into the merits when hearing a forum non conveniens application, the court in the present case thought it would be useful to examine this position (even though the court could not have departed from the Rainbow Joy if it was indeed binding). It provided two reasons. First was that the English courts had taken an opposite position, albeit by way of obiter. Secondly, the court thought that it was odd that a plaintiff in an exclusive jurisdiction clause case could rely on the merits of the case (via the no defence proviso) in showing strong cause whereas a plaintiff in a forum non conveniens application could not.
11.13 However, upon analysis, the court opined that – and this must be correct – merits of the case should not be taken into account in a forum non conveniens application from the perspective of procedure, policy and the separation of the question of the assumption of jurisdiction from that of substantive merits. Having satisfied itself then that the position established by the Court of Appeal was correct, the court turned its attention to the second aspect, the issue of compellability of witnesses.
11.14 As a factor in the forum...
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